Wednesday, April 21, 2010

Ballerinas are not the only ones on toes

The drop in SPX from 1213.92 to 1183.62 was 30.3 points and its equivalence in FAS was from 119.22 to 100.04 a drop of 19.18.  And the subsequent rally to 1210.99 was 27.37 points on the SPX and in FAS it was to 114.50 and was worth 14.44 points.  SPX has rallied 27.37/30.3 or 90% of the drop and FAS has come in  at 75% (14.44/19.18).  Generally FAS is faster than SPX except in this instance it is running behind.  This morning FAS in a hurry to get to the top line of the 15 min envelope and playing from the commodity traders book I sold FAS at 113.80 and waited and bought FAZ at 11.29 when FAS came back in the envelope and later sold it at 11.77. 
I am not going to play FAZ. It  moves in pennies and I have to buy large quantities to make any money. I did get a short signal on FAS at 110.84 and bottomed at 106.81.  Full $4.  This is same as the move in FAZ from 11.29 to 11.84.  I got a signal to go long at 110.23
very close to end of the day.  I went long in after hours at 109.63 but not very comfortable with it for FAS dropped to 108.37. It was an outside day in SPX and FAS with Higher High coming in the morning and Lower Low coming late in the day and that is negative for FAS and market.  Both closed in the negative not a positive sign.  FAS closed higher above the DOMA 77 both in 60 min and 15 min charts that is positive.  It is possible that this 27 point  rally we had is a counter to the mini correction of 30 points.  That seems so oblique a statement.  90% is a lot.  Unless we get a severe hit and take out the 1183 low I am going to continue to depend on DMRM and play along.  I have had a very good streak with envelope and DMRM I wouldn't be surprised if one of my near term trades goes sour.  I will be on my bullish toes.

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